Unix lawsuit agreement raises questions for SCO

The SCO Group may have a more difficult time making its case that Linux includes illegal source code than previously thought, according to documents published recently on the Groklaw.net Web site. Earlier this week the site published for the first time a 10-year-old lawsuit settlement agreement that grants developers the right to redistribute much of the Unix source code that SCO claims to own and which may ultimately strengthen IBM's defense in a lawsuit between the two companies.

"The agreement actually gives people rights to redistribute (Unix) software that they were not previously aware of," said Bruce Perens an open source advocate and one of the founders of the Open Source Initiative. "It makes it very clear that some of the Unix software that SCO is currently claiming as their own is distributable by the public as open source."

Though software developers generally understood that source code from one of the major variants of Unix, called the Berkeley Software Distribution (BSD), could be freely redistributed in the Linux operating system, the release of the agreement makes those terms public for the first time.

The agreement, obtained by Groklaw under a Freedom of Information Act request, settled a long-standing dispute over the ownership of the Unix source code, fought in the early 1990s between the University of California and an AT&T Corp. subsidiary called Unix Systems Laboratories Inc. (USL).

SCO eventually acquired a number of USL's Unix assets -- though exactly which assets it owns is presently the subject of a lawsuit -- and the Lindon, Utah, company has claimed that its Unix software has been illegally copied into the Linux source code. SCO also claims that IBM illegally contributed software derived from its Unix source code into Linux, and has launched a multibillion dollar lawsuit against the computer giant based on this allegation.

In December 2003, SCO provided a list of some of the files covered in the USL settlement, claiming that they "were never intended or authorized for unrestricted use or distribution under the GPL in Linux."

The settlement agreement, however, appears to say otherwise. Under its terms, the files in question may be "freely reproduced and redistributed by others," provided that they include a copyright notice.

Linux developers have denied SCO's claim that the files were copied.

Should SCO's claims prove true, the agreement's copyright notice clause could present problems for Linux developers, said Jeff Norman, an intellectual property partner with the Chicago law firm Kirkland Ellis. If the files were in fact copied, the developer responsible for adding the code could face "serious" consequences for not including the copyright notice, Norman said. Even so, that would be an issue for developers and not Linux users, he said.

But even if its allegations are proven, SCO might have a hard time convincing a jury that it suffered damages. "What damages has SCO suffered as a result of a failure to include copyright notices on code that is freely redistributable without royalty?" Norman asked. "I can't think of a viable damages theory."

The fact that the contract allows for such widespread distribution will also make it difficult for SCO to argue that the files include trade secrets, an argument that SCO has made in the past, Norman said. "Anything derived from those files is fair game," he said. "If USL allowed this code to be released and they say they're not going to sue people who used it ... it's not a secret anymore."

Publication of the settlement agreement also serves to answer the long-standing question of whether or not the 10-year-old agreement applies to SCO itself, said Kirk McKusick, a BSD developer who was involved in the USL case. "The agreement makes it binding on all successors of USL and the university," he said in an e-mail interview. "That means that this agreement has full force and effect on SCO."

This is an important point because it makes it clear that the code that was specified in the USL agreement can be freely redistributed in software like Linux and BSD, McKusick said. "Companies that use BSD have a rock solid defense if SCO were ever to go after them," he said.

According to Norman, the question of whether or not SCO, which is not mentioned in the agreement, is actually bound by its terms could be debated. "I think they probably will be bound by it, but I don't think it's a slam dunk," he said.

While the agreement does not cover code written after the 1994 settlement, it still manages to undercut some of SCO's legal arguments, said Dion Cornett, a financial analyst with Decatur Jones in Chicago. "It makes it much more burdensome for SCO to try and make their case when big chunks of what they claim to have copyright for are clearly, per this settlement, in the public domain"

The fact that USL seems to have ended its lawsuit by making such major concessions about how its source code can be distributed also raises a deeper question for SCO, Cornett said. "Is SCO just repeating history here, getting involved in lawsuits that on the surface look like a slam dunk?" he asked. "Will they follow the AT&T track and find themselves scrambling for some out."

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